The Administration’s economic stimulus plan

The Administration’s economic stimulus plan is very bold; characteristically, the boldness is apparently driven by the President himself. The plan is summarized here by the Washington Post. It includes acceleration of the already-enacted income tax cuts through 2006, not just 2004; complete elimination of taxes on dividends; various investment incentives for business; an increase in the child tax credit; and elimination of the marriage penalty.
Not all of this will survive in the final bill; how much tax relief we get depends largely on how many Republicans cross over to the other side. John McCain, not surprisingly, is already voicing criticisms that echo those of the Democrats. Two years ago, a number of Senate Democrats (twelve, if I recall correctly) voted with the Republicans for tax relief; this year, I suspect the Democrats will hang tougher. Still, the basic strategy seems right. Since the Democrats will attack either a big plan or a small plan in exactly the same way, there is little reason not to be bold. As a tax economist from the Heritage Foundation put it,”If you’re going to fight this battle, you might as well make it something worth fighting for.”